Five states have disability insurance that provides employees with coverage for injuries or illnesses that are not related to work. These states are: California, Hawaii, New Jersey, New York and Rhode Island. Puerto Rico also has a disability insurance program.
In these states, employees make disability insurance contributions, which are withheld from their paychecks by their employers. Employers must also make contributions in Hawaii, New Jersey and New York.
Except in New York, the disability insurance coverage requirements are the same as for UC insurance. (New York uses the common law right of control test, the same test it uses for workers’ compensation coverage.) If you pay UC for a worker, you must withhold and pay disability insurance premiums as well.
In California, New Jersey and Rhode Island, disability insurance is handled by the state unemployment compensation agency. The same employee records are used for UC and disability—and employers submit contribution reports for both taxes at the same time. New York’s disability program is administered by the Workers’ Compensation Board. In Hawaii, the Temporary Disability Insurance Division of the Department of Labor and Industrial Relations handles disability insurance.